Dubai: Are the pictures of your origami creations or hand-stitched tote bags getting an overwhelming and positive response on Instagram? Or did a friend message you, asking if you could create party favours for her upcoming bridal shower? Chances are if your craft is getting attention on social media, you may have considered becoming a social media entrepreneur.
Several businesses across the world have had their humble beginnings as Instagram accounts. As their social media popularity grew, so did their profits! From selling fashionable, phone-charger enabled travel suitcases to ethically sourced make-up and more, Instagram has provided the platform for businesses that have now become billion-dollar enterprises. So, if you are feeling inspired to turn your solo venture into a fully-fledged business, what is the best way to get all the paperwork in place?
Gulf News spoke to business setup consultants in the UAE to find out how social media entrepreneurs can set up their own legal entity in the UAE.
Always get a licence
In the UAE, you can’t sell anything for commercial gain without a licence. How much the licence will cost depends on where it is issued – it could be from a free zone, which can be a cheaper option, or an economic department.
The first thing to remember is that in order to conduct any business activity in the UAE, you need to first acquire the relevant business licence. This applies to any business, whether it is run through social media accounts like Instagram or Facebook, or through a brick or mortar shop.
"In the UAE, you can’t sell anything for commercial gain without a licence. How much the licence will cost depends on where it is issued – it could be from a free zone, which can be a cheaper option, or an economic department“In the UAE, you can’t sell anything for commercial gain without a licence. How much the licence will cost depends on where it is issued – it could be from a free zone, which can be a cheaper option, or an economic department,” Paul Bryson, Group Commercial Director of Virtuzone, a business setup and company formation specialist in the UAE, told Gulf News.
Can I apply for the E-Trader licence?
Jade Wong, business consultant at PRO Partner Group, spoke about the E-Trader licence offered by Dubai’s Department of Economic Development (DED), which allows UAE residents to set up a business with 100 per cent ownership, without the requirement of a Local Sponsor or National Service Agent. An office space is also not required, so the licence is an affordable option for entrepreneurs.
However, Wong noted that the licence only allows for trading activities for applicants who are GCC nationals. Non-GCC nationals can use the licence if they are providing professional services.
“The licence offers a range of activities. Trading activities, however, are available only for GCC nationals. For non-GCC nationals, this licence can provide an ideal, cost-effective solution for selling professional services using online platforms,” Wong said.
So, while the licence can allow you to legally operate a professional service company, if you wish to sell products like clothes or handicrafts, the option would be to set up a Limited Liabilities Company or LLC.
Licence for selling products online
E-commerce activities are available across various free zones in the UAE, allowing the licencee to use social media platforms to promote or markets products. However, trading of physical products to the mainland is not possible from a free zone, so the licencee would need to source an onshore agent to distribute the goods.
With online businesses, you would need to set up an LLC, and then apply for the right business activities under that licence.
Free zone licence
If you apply for a free zone business licence for an LLC, you have the option of 100 per cent ownership of the business, and the licence costs are also affordable.
"E-commerce activities are available across various free zones in the UAE, allowing the licencee to use social media platforms to promote or markets products. However, trading of physical products to the mainland is not possible from a free zone, so the licencee would need to source an onshore agent to distribute the goods," Wong said.
Mainland licence
A mainland licence for an LLC will require a 51 per cent local shareholder and office space. However, you would not face any restrictions in directly trading anywhere in the UAE. E-commerce and trading activities are available together for mainland licences, which would be ideal for business operating through social media.
For a detailed understanding of which jurisdiction – mainland or free zone – would work best for you, read our detailed guide here.
